CONGRESS

District 10 • The Federal Home Loan Bank of Topeka 29
At year-end, the FHLBank of Topeka was the second
smallest FHLBank with total assets of $44.4 billion.
Its balance sheet consisted of 53.1 percent
advances, 30.6 percent cash and investments, and 14.4
percent mortgage loans. Advances increased during 2015
by 28.8 percent to $23.6 billion. Cash and investments
grew 41.4 percent during 2015 because of significant
increases in liquid investments and MBS issued by Fannie
Mae and Freddie Mac. The mortgage loans portfolio
increased modestly by 2.6 percent for the second consecutive
year. Nevertheless, the mortgage loans ratio to assets
declined but was still the second highest in the FHLBank
System. Funding from consolidated obligations rose to
$41.7 billion, of which 47.7 percent were bonds and 52.3
percent were discount notes.
The FHLBank reported net income of $93 million for
2015, the second lowest among the FHLBanks. Net
income decreased from $106 million for 2014 and $119
million for 2013. The quarterly change in net income
from year-end 2014 to year-end 2015 ranged from negative
($11.6) million to $5.8 million. The resulting return
on assets of 0.21 percent was the third lowest in the
FHLBank System. Net interest income increased for the
second consecutive year and totaled $242 million. The
net interest spread of 0.52 percent was the third highest
in the FHLBank System. The FHLBank’s yield on mortgage
loans of 3.24 percent was the second lowest in the
FHLBank System. Operating expenses of $48 million were
the lowest of any FHLBank in nominal terms, but ranked
sixth highest when compared to total assets at 0.11 percent.
terms at $652 million, but fifth highest when compared to
total assets at 1.47 percent. The FHLBank’s ratio of market
value of equity to the par value of capital stock was the
third highest in the FHLBank System at 171 percent.
The FHLBank had 769 members at year-end 2015: 636
commercial banks, 77 credit unions, 31 thrifts, 23 insurance
companies, and 2 community development financial
institutions. The FHLBank’s membership was heavily concentrated
in community financial institutions with assets
less than $1.1 billion, and the ten largest borrowers held
64 percent of total advances.
At the time of its October 2015 examination, FHFA concluded
the FHLBank’s overall condition and operations
were satisfactory with strong capital, asset quality, and
liquidity positions. The examination observed that overall
asset quality improved because of low classified assets and
member credit risk, sound mortgage portfolio quality, and
strengthened credit risk practices. However, the examination
determined that the FHLBank’s processes for addressing
examination findings did not consistently result in
accurate reporting on the status of findings resolution;
management lacked an adequate process for approving
significant new financial strategies that evidenced full and
timely consideration of all risks and operational preparedness;
development, production, and reporting of certain
important market risk and performance analytics was not
done independently from the division of the FHLBank
that was responsible for risk positioning and assumption.
The FHLBank’s regulatory capital ratio was 4.19 percent,
which was the lowest in the FHLBank System. Its retained
earnings were the lowest of any FHLBank in nominal
29
This summary reflects conclusions made at the time of FHFA’s 2015 examination of the FHLBank of Topeka supplemented by year-end financial information.
40 FEDERAL HOUSING FINANCE AGENCY